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Should You Buy Taylor Wimpey plc, Capita PLC & Greggs plc Following Today’s Results?

Today I am looking at the investment prospects of three newsmakers in midweek business.

Taylor Wimpey

Another week, another positive release from the UK’s housebuilding sector. This time around it’s the turn of Taylor Wimpey (LSE: TW), and the market greeted the release by sending shares 0.2% higher from Tuesday’s close. The business advised that revenues leapt 12.2% during January-June to £1.3bn, a result that propelled pre-tax profit more than a third higher to £238m.

The construction play advised it has witnessed “a more significant improvement in consumer confidence and mortgage availability and cost” since May’s general election, and forward sales clocked in at 8,120 homes as of the end of June, up from 7,587 units as of the corresponding point in 2014. Against this backcloth the City expects Taylor Wimpey’s bottom line to continue swelling, and earnings growth of 32% and 14% is currently pencilled in for 2015 and 2016 correspondingly.

These numbers leave the company changing hands on ultra-low P/E multiples of 12.5 times and 11.1 times for these years, and in my opinion Taylor Wimpey is also a great value selection for income chasers, too. Indeed, today’s results prompted the builder to vow to return £300m to shareholders next July, up 20% from this year’s special dividend. Consequently I expect current payout forecasts to receive a shot in the arm — Taylor Wimpey is anticipated to pay dividends of 9.3p per share in 2015 and 10.2p in 2016, yielding an impressive 5.1% and 5.5%.

Capita

Like Taylor Wimpey, outsourcing specialists Capita (LSE:CPI) provided a very impressive set of numbers in Wednesday’s session, although on this occasion the market failed to positively react and the firm was last 2% lower in midweek trade. The London firm advised that underlying pre-tax profit advanced 11% during January-June, to £264.9m, driven by a 10% turnover improvement to £2.3bn.

Capita advised that “we continue to expect to deliver low double digit revenue growth in 2015, with a slight increase in organic growth in the second half of the year” as new contracts come online. And organic sales are expected to shoot still further in 2016 as the bid pipeline pays off, it added. The City shares this positive view, and expects Capita to punch earnings growth of 9% and 7% in 2015 and 2016 respectively.

While subsequent P/E multiples of 18.2 times for this year and 17 times for 2016 may fall outside the benchmark of 15 times that indicates great value, I believe Capita’s ability to keep churning out huge contracts with blue-chip customers merits this premium — indeed, the value of major contracts clocked in at £1.6bn during the first half, up from £1.3bn in the same 2014 period. And I believe prospective dividends of 32.1p per share for this year and 34.3p for 2016, yielding a decent 2.5% and 2.6% correspondingly, seals the investment case.

Greggs

Sausage roll house Greggs (LSE: GRG) also furnished Wednesday’s session with a bubbly trading update, and shares were recently 3.2% higher on the day. The baker advised that pre-tax profits galloped 52% higher during the first six months of 2015, to £25.6m, as total revenues increased a brilliant 6.4% to £398m.

Greggs’ massive transformation scheme to compete with upmarket chains like Pret A Manger and Costa Coffee is clearly paying off handsomely, with initiatives like revamping its sandwich range, introducing new coffee blends, and improving the decor of its stores going down a treat with hungry customers.

Following today’s results the firm said it was “confident of delivering a year of good growth slightly ahead of our previous expectations,” news that is likely to give the City fresh ammunition for earnings upgrades. Current forecasts suggest earnings advances of 17% for 2015 and 7% for next year, leaving the business dealing on elevated P/E ratios of 23.1 times and 21.4 times correspondingly. But given the steady progress Greggs continues to make, I believe the baking play is still decent value despite these heady readings.

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Royston Wild owns shares of Taylor Wimpey. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.